Even Viacom May Find Launches Tough

In terms of distribution and advertising, Viacom Inc. will
face a tough time if it decides to go ahead and launch two new cable networks, with one
aimed at the over-50 crowd and the other at science-fiction fans.

Viacom has formed a task force to study the feasibility and
potential market for a channel for the aging baby boomer and senior-citizen audience.

And the media conglomerate is considering taking a run at
Sci-Fi Channel by using the library of its Paramount unit -- which includes three Star
Trek spinoff series -- as the programming upon which to build a new network.

Viacom was forced to sell its 50 percent interest in Sci-Fi
in fall 1997, and it apparently still wants a network representing that genre.

And with distribution still tight, observers said, cable
operators may not make room for a second science-fiction network -- especially since USA
Networks Inc.'s Sci-Fi has improved its lineup and ratings over the past year.

As for Viacom's second proposed network, the existing
channel dedicated to "mature" audiences, GoodLife Television Network, has
struggled to get carriage.

And in terms of advertiser appeal, Madison Avenue mavens
have never been particularly enamored of the 50-and-older demographic, as officials at the
CBS network can attest.

Viacom chairman Sumner Redstone discussed the two proposed
networks earlier this month at the New York Stock Exchange, on the day when Viacom's
stock began trading there. According to published reports, Redstone said cable operators
had told him that they would support the two new channels.

Despite Redstone's comments, operators expressed
doubts last week about two more channels covering the same topics or genres.

"These sound at first blush like they're channels
that will serve niches where there are already channels in each category," said Gregg
Graff, senior vice president and general manager at Insight Communications Co. in
Columbus, Ohio.

"I'm not sure that they'll be able to split
those markets ... And it will be hard to make new channels sound more attractive than the
established networks," Graff added.

Viacom spokesman Carl Folta stressed last week that his
company hasn't decided whether or not to go ahead with either of the proposed
channels. Folta added that even if Viacom did green-light them, rollouts wouldn't be
imminent.

For example, Viacom couldn't launch a science-fiction
network until at least fall 2001 due to a noncompete clause stemming from the sale of its
stake in Sci-Fi.

Viacom's Paramount holds the rights to three Star
Trek spinoff shows: The Next Generation, Deep Space Nine and Voyager.These could form a base of programming for a new channel.

But Sci-Fi officials noted that they have the rights to two
of Paramount's premiere science-fiction properties -- Star Trek and The
Twilight Zone --until at least 2004, in addition to a slew of new, original
programming that's come onto its schedule this year.

"Three series does not make a 24-hour-a-day,
seven-day-a-week network," said Steve Brenner, USA Networks' president of
operations. "And they've got all of the problems of competing in this
marketplace: distribution and advertising."

Sci-Fi has grown slowly, and Brenner acknowledged that the
quality of its programming was substandard at first. He said this was because there was
very little off-network science-fiction programming available five years back or more.

It's still hard to find science-fiction programming.
The competition for it is fierce and prices are high, since most of the six broadcast
networks air it in some form, according to Brenner.

Sci-Fi, which is paying upfront cash launch fees, has also
seen its distribution rise to 54.7 million this month, an increase of 12 percent during
the past year. And in the first quarter, its primetime ratings rose 17 percent from a year
ago, to a 0.7, according to Nielsen Media Research.

Graff said he's pleased with Sci-Fi's
performance, its better original programming and its higher ratings.

Patty McCaskill, vice president of programming at Charter
Communications, said she'd be interested in a second science-fiction network only
"if it's differentiated programming against a popular genre."

Other MSO officials didn't see a need for a second
science-fiction network, for entirely different reasons than Graff.

"Sci-fi has been done," said Pam Burton, director
of marketing for Prime Cable. "And it's been a big disappointment."

She added that while Sci-Fi's programming has
improved, it's "taken a while," and its ratings still aren't where
they should be.

Like cable operators, some media buyers have their
reservations about a second science-fiction network, too.

"The question is: What would be different about the
programming?" asked Ellen Oppenheim, senior vice president and media director at
Foote, Cone & Belding.

Added Steve Grubbs, director of national TV buying at BBDO
Worldwide, "From an advertisers' standpoint, I don't see how it bring
something unique and special. The marketplace is already crowded."

Just like its proposed science-fiction network, Viacom
should brace for an uphill battle to get its 50-plus channel off the ground, according to
GoodLife TV president Squire Rushnell.

"It's a challenge," he said. "It's
a demographic that doesn't want to deal with age in the first place So we
describe our network as a state of mind."

He noted that people 49 and older control 50 percent of the
country's disposable income, and he has high hopes that advertisers will finally
start to value that demographic. "When boomers reach 55, Madison Avenue is finally
going to wake up," Rushnell said.

GoodLife TV -- which Rushnell said is in 8 million homes,
and which Nielsen has in 5.3 million -- is looking for a strategic partner.

"We're a little David in a field of many mighty
Goliaths," Rushnell said. "I think that Viacom and GoodLife probably ought to do
business together."

Despite Redstone's upbeat remarks about a channel for
older Americans, other Viacom officials have acknowledged the hurdles that they face in
doing one.

In an April 6 interview with the Los Angeles Times, MTV
Networks president Tom Freston talked about the proposed 50-plus network.

"We don't know exactly what it is yet,"
Freston told the Times. "It wouldn't be a nostalgia-based network.
It's a tricky thing to program for older people, because they don't want to be
told that they're old. But we've done very well with baby boomers, and
they're used to having channels that are sort of specialized to them through their
lives, so I don't think that it's beyond reason that we can craft one that would
somehow appeal to them -- but I don't know what it is."

Operators raised the same question that Freston did about a
channel for those 50 and older. Burton, for example, pointed to the difficulties that
GoodLife has faced.

"Baby boomers don't want to be labeled as
older," she said. "They want to be labeled as better."

McCaskill said launching a network "targeting a
50-plus audience has proved very difficult for a lot of people." She questioned
whether that older demographic is homogeneous enough to support a single network.

In terms of media buyers, several said members of the
50-and-older demographic are already heavy TV users, easily reached by a variety of
programming, so there's no need to create a channel just for them.

"They watch so much TV that you can't avoid
them," said one media buyer who didn't want to be identified.

But several ad-agency executives were curious about how
Viacom might go about targeting the 50-and-older audience.

"It's not as if television doesn't reach
that demographic," Oppenheim said. "But there may be a different approach to
reach them that would be valuable."